Equity Release

If you have already paid off your mortgage, or you have a very small mortgage outstanding, you could be eligible to release equity from your home. Homeowners over 55 can find themselves short of disposable income, but due to rising house prices may own a highly valuable property. Equity release allows you to get hold of some of the value of your home without having to move or downsize.

Equity release schemes aim to unlock some or all of this equity and turn it in to a tax-free lump sum or regular payments. To be eligible you must be 55 or over with a UK property worth at least £70,000. Minimum age, property value and criteria vary between providers.

What would you do with your money?

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Home improvements?

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Buy a new car?

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Gift a loved one?

Types of equity release

Lifetime mortgages

A lifetime mortgage enables you to release a tax-free cash lump sum from the value of your home. You will continue to own your home completely and retain the right to live in it for the rest of your life.

You can choose to repay the interest each month or make no monthly payments and roll up the interest into the loan amount. The amount borrowed plus accrued interest is usually repaid from the proceeds of the sale of your property when you die or move permanently into long-term care.

  • Take out a loan that is secured on your home, usually between 20 and 50 per cent. The older you are the higher percentage you will be eligible to borrow.
  • Continue to own your own home, although you will have to pay back the mortgage on it;
  • Repay the mortgage from the proceeds of the sale of your home when you die, or if you move out of it (perhaps into a care home).

The majority of Lifetime Mortgages also come with a ‘no negative equity’ guarantee. This means that if you live longer than expected, or even if house prices go down, the amount owed will never exceed the open market value of your home when it comes to be sold.

Home reversion plans

A home reversion plan involves selling part or all of your home to a home reversion provider. You receive the sale proceeds as cash, which can be paid as regular instalments or as a single lump sum.

On any home reversion plan that is recommended, you retain the right to stay in your property rent-free for the rest of your life. You will receive less than the full market value of your home, because the buyer cannot re-sell the property until you die or move permanently into long-term care.

  • Sell all or part of your home to a reversion company;
  • No longer own your own home, but continue to live there as a tenant of the reversion company;
  • The home is sold when you die, or if you move out of it (perhaps into a care home).

A Home Reversion plan is a sale and not a loan; therefore, there is no interest to pay. Instead, the Home Reversion provider will pay less for the relevant proportion of your home than it would be worth on the open market. Typically, you will receive between 35% and 60% of its market value depending on your age. So, for instance, if you sold 50% of a £200,000 property you could receive between £35,000 and £60,000 rather than £100,000.

Think you could be eligible, or want to know if you are? Speak to one of our expert equity release advisors today.

All lenders on our equity release panel are members of the Equity Release Council. The Equity Release Council is the industry body for the equity release sector and was born from an expansion of the remit of SHIP (formerly Safe Home Equity Plans).

A major focus of the Equity Release Council’s work is to ensure that products are safe and accessible for consumers. Each member of the Council that provides equity release products is signed up to the Equity Release Council’s Code of Conduct which puts in place a number of safeguards and guarantees for consumers.

This means that people who use equity release products offered by Equity Release Council members can have confidence in the products they use and the information they receive. On top of this all members also abide by the overarching principles of the Council.

An equity release product will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits. To understand the featured and risks please ask for a personalised illustration.

Lifetime mortgage: This will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefit. This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

Home reversion plan: To understand the features and risks please ask for a personalised illustration. A home reversion plan will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits.